Summary:
Last week I wrote: “we may see temporary bounce soon”, that is precisely what happened from Monday to Wednesday, Thursday was more or less flat, but on Friday selling resumed, attributed to Infosys, stock was being hammered approx 10% in a day on back of the resignation of CEO, “Dr. Vishal Sikka” from his post from immediate effect, a day later after the announcement of share buy back on Thursday and some pressure was put on by persistently weak pharma stocks.
Current outlook:
Well, the correction is over or not, but it was just a decent bounce after a steep sell off last week. It was not the enduring intermediate term bottom I had imagined, and it may be a while before we see that. As I watched decelerating price movement on Thursday and Friday, it becomes apparent that further correction is likely. Moreover, earning season is almost over, no big surprises on either were noticed.
The most compelling change to this week was improving market breadth (Advance/decline ratio), As long as improvement in AD ratio holds, my opinion would be that, selling pressure can be absorbed and the re-accumulation may take place, which may led to the consolidation for a while before any kind of decisive break out.
Be Watchful like savvy investor..!!
Pankaj